Federal Court of Australia Queensland Building and Construction Commission v Mead [2024] FCA 1355 File number(s): QUD 487 of 2023 Judgment of: MEAGHER J Date of judgment: 25 November 2024 Catchwords: BANKRUPTCY – Sequestration order made by a registrar – Application made by respondent for review of sequestration order – Where defects in documents alleged – Whether the respondent was ordinarily resident or had a dwelling house in Australia – Where criteria for sequestration order are established – Whether the respondent is solvent – Whether the sequestration order ought not be made for other sufficient cause – Where no reason to go behind the judgment debt – Where the respondent has not established solvency – Where no other sufficient cause established – Sequestration order is affirmed Legislation: Bankruptcy Act 1966 (Cth) ss 35A(1)(h), 35A(6), 40, 43, 43(1), 52(1), 52(2)(b), 52(4), 306 Bankruptcy Regulations (Cth) regs 9, 10, 10A Federal Court (Bankruptcy) Rules 2016 (Cth) rr 2.02, 4.02, 4.04, 4.06 Cases cited: Baycorp Collections PDL (Aus) Pty Ltd v Hsia [2018] FCCA 249 Bechara v Bates (2021) 286 FCR 166 Cain v Whyte (1933) 48 CLR 639 Daly v Watson (1994) 50 FCR 544 Endresz v Australian Securities and Investment Commission (No 2) (2015) 228 FCR 334 Fuller v Alford (2017) 252 FCR 168 Harris v Caladine (1991) 172 CLR 84 Mathai v Kwee (2005) ABC(NS) 268 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 Pineview Property Holdings Pty Ltd v Dimitriou (No2) [2019] FCA 1416 Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 Re Taylor; ex parte Natwest Australia Bank Limited (1992) 37 FCR 194 Sandell v Porter (1966) 115 CLR 666 Stankiewicz v Plata [2000] FCA 1185 Totev v Sfar (2008) 167 FCR 193 Toyota Finance Australia Ltd v Youssef Berro [2022] FCA 497 Veale v Coleman (2024) 304 FCR 182 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 69 Date of hearing: 26 June 2024 Counsel for the Applicant: Mr NJ Derrington Solicitor for the Applicant: Gadens Lawyers Counsel for the Respondent: The Respondent appeared in-person ORDERS QUD 487 of 2023 BETWEEN: QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION Applicant AND: MAXWELL JAMES MEAD Respondent order made by: MEAGHER J DATE OF ORDER: 25 NOVEMBER 2024 THE COURT ORDERS THAT: 1. The interim application filed by the respondent on 28 February 2024 is dismissed. 2. The Orders made by Judicial Registrar Schmidt on 7 February 2024 are affirmed. 3. The applicant creditor's costs of and incidental to the interim application filed on 28 February 2024 be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MEAGHER J INTRODUCTION 1 This is an application made by Mr Maxwell Mead for review of the sequestration order made by Judicial Registrar Schmidt on 7 February 2024 under the Bankruptcy Act 1966 (Cth). 2 At the hearing of the review application, the applicant, the Queensland Building and Construction Commission (QBCC), read the following material: (1) Creditor's petition (including Affidavit of Claude Paul) filed 3 November 2023 (2) Affidavit of Scott Couper (Search) filed 3 November 2023 (3) Affidavit of Leon Thach (Service of Bankruptcy Notice) filed 3 November 2023 (4) Consent of David Michael Stimpson and Anne Meagher as contained in the affidavit of Leon Tach filed 4 December 2023 (5) Affidavit of Leon Thach (Service of Creditor's Petition) filed 4 December 2023 (6) Mr Mead's notice stating grounds of opposition filed 31 January 2024 (7) Mr Mead's notice of appearance filed 31 January 2024 (8) Affidavit of Carma Holland filed 6 February 2024 (9) Affidavit of Carma Holland (Search) filed 6 February 2024 (10) Affidavit of Chris Sia (Verifying Debt) filed 6 February 2024 (11) Mr Mead's amended notice stating grounds of opposition filed 3 May 2024 (12) QBCC's outline of submissions filed 21 May 2024 (13) Affidavit of Carma Holland filed 21 May 2024 (14) Affidavit of Carma Holland filed 25 June 2024 (15) Affidavit of Josh Phillips (Verifying Debt) filed 25 June 2024 (16) Short Form Bill of Costs provided to Court on 25 June 2024 3 The QBCC also made reference to the interim application filed on 28 February 2024, the affidavits of Mr Mead filed on 31 January 2024 and 3 May 2024, Mr Mead's outline of submissions filed on 7 May 2024 and Mr Mead's submissions in reply filed on 4 June 2024. 4 Mr Mead relied upon his notice of appearance, notice stating grounds of opposition, amended notice stating grounds of opposition and his affidavits filed on 31 January 2024 and 3 May 2024. It appears he also relied upon his written submissions filed on 7 May 2024 and his written submissions in reply filed on 4 June 2024. 5 For the reasons that follow, the review application is dismissed, and the Orders made by Judicial Registrar Schmidt are affirmed. background 6 The debt in question is in the sum of $86,006.92 for a judgment made on 30 June 2023 of the Magistrates Court of Queensland and interest accrued on the judgment since the date of judgment. 7 Mr Mead was and is the sole director of a company, Nationwide Homes Pty Ltd, which failed to complete a building contract. 8 Under a statutory insurance scheme, the QBCC paid out money in respect of the incomplete work and sought to recover it from Mr Mead in his capacity as the director of Nationwide. The judgment in the Magistrates Court of Queensland was granted summarily. 9 The debt was not satisfied and accordingly a bankruptcy notice was issued on 19 September 2023 and served on Mr Mead (with a copy of the judgment) on 29 September 2023. 10 Mr Mead did not pay the amount referred to in the bankruptcy notice, nor advance to the QBCC a basis upon which the debt could be satisfied, within 21 days of being served with the bankruptcy notice. 11 On 1 November 2023, Mr Mead sent a letter dated 31 October 2023 to the solicitors for the QBCC advising inter alia that he was unable to pay the amount owing. 12 On 26 November 2023, the creditor's petition was personally served on Mr Mead. 13 The hearing of the creditor's petition was adjourned on 6 December 2023, and the sequestration order was made on 7 February 2024. 14 On 28 February 2024, Mr Mead filed an interim application seeking the following relief: 1. Order that the decision of Registrar Schmidt made in this matter on the 7th day of February 2024 be reviewed "de novo" by this court. 2. Order that the Applicant be granted leave to file and serve Affidavits in support of this Application after the date hereof and prior to the hearing of this application 3. Upon review Order that the Sequestration Order made by Registrar Schmidt in this matter on the 7th day of February 2024 be set aside and the creditors petition be dismissed pursuant to Section 52(2) (b) of the bankruptcy Act 1966. 15 Orders were made on 22 March 2024 which, inter alia, enabled Mr Mead to file and serve any submissions and affidavits in support of his application. 16 On 3 May 2024, Mr Mead filed an amended "Notice stating grounds of opposition to application, interim application or petition". The grounds contained in the amended notice included that there were defects in the material served upon Mr Mead, that he was not insolvent, that in any case the debt was not his, that the QBCC had unreasonably refused offers of settlement, that Mr Mead's poor health should be taken into account, that the debt arose as a result of the COVID-19 pandemic, and that the Court should exercise its discretion in Mr Mead's favour as to do otherwise would cause undue hardship to him and his wife. LEGAL PRINCIPLES 17 Judicial power of the Commonwealth may only be exercised by judges of federal courts or other courts exercising federal jurisdiction: Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 at [1]. However, federal judicial power may be delegated to registrars providing such delegated power is subject to review or appeal by a judge or judges of the Court: Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9 at 94 – 95. 18 Pursuant to s 35A(1)(h) of the FCA Act, r 2.02 and Part 1 of Schedule 1 of the Federal Court (Bankruptcy) Rules 2016 (Cth), a registrar may make a sequestration order. 19 Section 35A(6) of the FCA Act provides that the Court may, on application by a party to the proceeding or of its own motion, review an exercise of power by a registrar. 20 A review pursuant to s 35A(6) is a hearing de novo, "in which the matter is considered afresh on the evidence and on the law at the time of the review": Bechara at [17]; Totev v Sfar (2008) 167 FCR 193; [2008] FCAFC 35. 21 The Act relevantly provides: 40 Acts of bankruptcy (1) A debtor commits an act of bankruptcy in each of the following cases: … (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia—within the time fixed for compliance with the notice; or (ii) where the notice was served elsewhere—within the time specified by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; … 43 Jurisdiction to make sequestration orders (1) Subject to this Act, where: (a) a debtor has committed an act of bankruptcy; and (b) at the time when the act of bankruptcy was committed, the debtor: (i) was personally present or ordinarily resident in Australia; (ii) had a dwelling‑house or place of business in Australia; (iii) was carrying on business in Australia, either personally or by means of an agent or manager; or (iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager; the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor. … 52 Proceedings and order on creditor's petition (1) At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition. 22 In Stankiewicz v Plata [2000] FCA 1185, the Full Court of the Federal Court (Drummond, Sackville and Dowsett JJ), citing Barwick CJ in Sandell v Porter (1966) 115 CLR 666 at 670, stated at [30]: In order to satisfy the Court that he or she is "able to pay his or her debts", it is not necessary for the debtor to show that he or she has cash resources immediately available for this purpose. But the debtor must be able to realise assets, sufficient to pay the debt, within a relatively short time. As Barwick CJ said in Sandell v Porter (1966) 115 CLR 666, at 670, the resources to be considered "extend to moneys which [the debtor] can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency." 23 As to s 52(2)(b) of the Act, which provides that a Court may dismiss a creditor's petition if satisfied that for "other sufficient cause" a sequestration order ought not be made, I refer to the observations of the High Court in Cain v Whyte (1933) 48 CLR 639; [1932] HCA 6 at 646, wherein it is stated that: …it is for the debtor to show some cause overriding the interest of the public in the stopping of the unremunerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the Court to outweigh those considerations before it can be said that sufficient cause is shown against the making of the sequestration order… 24 Further, as stated by the Full Court of the Federal Court (Edmonds, Gordon and Beach JJ) in Endresz v Australian Securities and Investment Commission (No 2) (2015) 228 FCR 334; [2015] FCAFC 33 at [37]: The circumstances which may constitute "other sufficient cause" are extremely variable, and it is inappropriate to catalogue or circumscribe them (Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1 at 5 per Fisher, Morling and Wilcox JJ and Cain v Whyte at 645). But even if "other sufficient cause" has been shown, that merely enlivens the Court's discretion to refuse to make a sequestration order. The power in s 52(2) is permissive, not mandatory. Even if a debtor can bring himself within s 52(2)(b), that does not entitle him to have a sequestration order refused (Russell v Polites at [24] per Flick J). 25 As to whether the Court should go behind the judgment debt, Wigney J in Pineview Property Holdings Pty Ltd v Dimitriou (No2) [2019] FCA 1416 at [50] stated as follows: In Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 , Kiefel CJ, Keane and Nettle JJ (at [43]), with whom Edelman J relevantly agreed (at [97], [110]), made it clear that this statement should not be given the "artificially narrow application" that the appellant in that case urged, which was that the bankruptcy court's discretion to go behind a judgment after a contested hearing was enlivened only in the event of some fraud, collusion or miscarriage of justice. Rather, the categories in which the court will inquire into the validity of the judgment debt are not closed or constrained to any fixed categories. The discretion to go behind the judgment will be enlivened whenever there are "substantial reasons … for questioning whether behind [the] judgment there was in truth and reality a debt due to the petitioner": Wren at 225 (per Barwick CJ); referred to with approval in Ramsay at [65] (per Kiefel CJ, Keane and Nettle JJ) and [110] (per Edelman J). evidence of mr mead 26 Mr Mead filed two affidavits in the matter. There was considerable overlap between his evidence and the submissions he made. 27 From the affidavit filed on 31 January 2024, Mr Mead's evidence may be summarised as follows: He became a director of Nationwide to assist an immigrant, Mr Alex Harnden, whose status precluded him from being a company director. Nationwide was a construction company, in which Mr Harnden owned all of the shares. Mr Mead had no involvement in the operations of Nationwide. The Magistrates Court granted judgment against the defendants without a trial. He has been unable to negotiate with the QBCC with respect to the debt. The QBCC has been unreasonable in that regard. The petition and documents served upon him contain defects. For example, the petition states that he has a dwelling house or place of business in Australia, which is not the case. Therefore, he deposes that the affidavit of Mr Claude Paul verifying the creditor's petition cannot be correct, nor can the affidavit of service be relied upon. That s 111C of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act), which attaches liability to directors of companies, constitutes a penalty upon directors of those companies for the actions of the company. Mr Mead is not insolvent. He is able to meet his debts as they fall due and has no outstanding debts. Mr Mead is unable to work full-time due to ill health. His wife is the primary income producer in their household. Mr Mead has suffered a serious cardiac arrest leading to hospitalisation in the ICU. He also suffers from severe kidney disease. There were medical reports supporting Mr Mead's statements regarding his health. 28 The additional evidence contained in Mr Mead's affidavit filed on 3 May 2024 may be summarised as follows: Nationwide's debt arose due to circumstances beyond its control. Mr Harnden had agreed to pay any of Nationwide's debts out of the sale of a "spec home" being built by Nationwide, but that agreement was not on honoured. Mr Mead's ill health has affected his ability to conduct the litigation with the QBCC. He has also recently been diagnosed with an enlarged prostate. Exhibited to Mr Mead's affidavit of 3 May 2024 were updated medical reports. Mr Mead's wife has mental health issues. This was supported by medical evidence exhibited to Mr Mead's affidavit. The medical evidence included that she is unable to work and even after recovery, she would require a gradual return to work that should only be in a part-time role. Given Mr Mead's wife is currently unable to work, their household income has been reduced. The change in circumstances is due to circumstances outside their control. Mr Mead's wife purchased the home in which they live, and is the sole owner, as "compensation to her for her loss of prestige, position, assets, reputation and reasonable expectations upon [him] being struck off the roll as a solicitor and being made bankrupt in or about 1999". The trustees appointed by Judicial Registrar Schmidt will consider the prospects of "attacking the property owned by [his] wife". Such an approach will cause great further harm to her mental health which would be an "unconscionable outcome". Such an approach would cause undue hardship, and if the home has to be sold, lead to "two more people being made homeless in Queensland and forced onto a non-existent rental market". submissions of mr mead 29 Mr Mead contended that the sequestration order ought not be made on four bases: first, that there were defects in the creditor's petition and affidavit verifying its contents, second, the circumstances in which the debt arose, third that he is not insolvent, and fourth that the issue of a creditor's petition will lead to extreme hardship to himself and his wife. Defects in the documents relied on by the QBCC 30 Mr Mead's submissions were that the creditor's petition, in referring to him having a dwelling house or place of business in Australia when he had neither, was incorrect, and so too it followed was the affidavit of Mr Claude Paul verifying the contents of the creditor's petition. 31 While Mr Mead's affidavit of 31 January 2024 deposed to further defects in the documents relied on by the QBCC, Mr Mead made submissions only regarding the purported defects in the creditor's petition and the affidavit verifying the creditor's petition. 32 Mr Mead's argument was that Mr Paul could not have deposed the contents of the creditor's petition on his own knowledge at the time of the bankruptcy. Mr Mead's position was that it may be possible to rectify some defects or irregularities in documents after the event, but not an affidavit verifying a creditor's petition, which is an essential requirement of a creditor's petition. This was particularly the case, Mr Mead argued, with respect to the making of the sequestration order as it "is a quasi-penal process that results in the seizure of debtor's property and as a quasi-penal provision should be interpreted narrowly", relying on Veale v Coleman (2024) 304 FCR 182; [2024] FCAFC 83 at [139]. 33 In that regard, Mr Mead referred to s 306 of the Act as follows: 306 Formal defect not to invalidate proceedings (1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court. (2) A defect or irregularity in the appointment of any person exercising, or purporting to exercise, a power or function under this Act or under a personal insolvency agreement entered into under this Act does not invalidate an act done by him or her in good faith. 34 He asserted that not only could s 306 not apply in circumstances where Mr Paul's affidavit deposed to knowledge of something which he could not have known at the time of the making of the affidavit, but nor could Mr Paul rely on knowledge he acquired some six months later. 35 Therefore, Mr Mead submitted, the creditor's petition fails as the matters stated in it and the affidavit verifying its contents cannot be relied upon and therefore the sequestration order should not be made. The circumstances in which the debt arose 36 Despite disavowing that he was asking the Court to go behind the judgment, Mr Mead submitted that the Court could rely on Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28 as authority for the proposition that the Court, in exercising its discretion to go behind the judgment upon which a petition is based, could "enquire as to its validity and thereby the circumstances giving rise to the debt" (emphasis added). 37 As an example of the exercise of discretion, Mr Mead referred the Court to the statement of French CJ in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [28] as follows: …After all the requirements of administrative justice have been met in the process and reasoning leading to the point of decision in the exercise of a discretion, there is generally an area of decisional freedom. Within that area reasonable minds may reach different conclusions about the correct or preferable decision. However, the freedom thus left by the statute cannot be construed as attracting a legislative sanction to be arbitrary or capricious or to abandon common sense. 38 Mr Mead further maintained that there was no real authority for these sorts of cases precisely because they involve the exercise of a discretion. 39 Mr Mead contended that the following circumstances be taken into account by the Court: He was self-represented before the Magistrates Court. He was still unwell, and only recently discharged from hospital in which he had been gravely ill. He received the QBCC's submissions only the afternoon before the Magistrates Court hearing, yet was not granted the adjournment he sought, rather was warned of the dangers of incurring further costs as a result of adjournments. The debt was not incurred by him personally – rather it was incurred by a company, Nationwide, in respect of which he was a director only as a favour to a friend. The debt was incurred during COVID-19, during which there was a shortage of tradespeople, and which he considered should be viewed as a "natural disaster". QBCC was unwilling to discuss settlement with him. 40 According to Mr Mead, the Court can therefore take a "more holistic view of all of the facts" in reaching its conclusion under s 52(2)(b) of the Act. Mr Mead is not solvent 41 Mr Mead submitted that he is not insolvent. He stated that he is able to meet all his bills as they become due and this debt is not one for which he should be responsible. Further, he submitted, the debt that was incurred was beyond his control – it was incurred by Nationwide during the COVID-19 pandemic. Making a sequestration order would cause extreme hardship 42 Mr Mead argued that were the Court to make a sequestration order, it would have an extremely adverse impact on his wife. She has pre-existing mental health issues which have been exacerbated by this process. Mr Mead's wife has been the main income earner in the family since Mr Mead was struck off the roll as a solicitor. However, Mr Mead's wife's health has since deteriorated further such that she has been unable to work. Further, Mr Mead submitted, the medical evidence does not fully portray the extent of his wife's mental health condition – they simply "state blandly what the situation is". Mr Mead's submission was that if his wife's mental health was to deteriorate further, as would happen if a sequestration order was made and any "attack" on the property is to occur, she would continue to be unable to work. 43 In Mr Mead's submission, if a sequestration order was to be made, it will lead to "an unconscionable outcome" for his wife. 44 As well, Mr Mead submitted that his ill health has precluded him from working although, in oral submissions, he stated that his health was improving such that he may be able to work again. 45 Mr Mead also submitted that if a sequestration order were made, both he and his wife would suffer as their lifestyle will be even more negatively impacted. To that end, Mr Mead's written submissions include that it was not in the public interest for a sequestration order to be made as follows: I submit that a decision to not issue a sequestration order against me would actually be in the public interest in that it would show empathy and humanity and it would avoid undue hardship on both my wife and myself; avoid the unconscionable outcome of damaging increased mental health strain on my wife, and ensure that my wife, an innocent third party herein would not be traumatized by the loss of her home, hospitalization and the loss of her employment Other submissions 46 Mr Mead referred to the statement of Kiefel CJ, Keane and Nettle JJ in Ramsay at [67] that a Bankruptcy Court is concerned to "protect the interests of third parties who were not participants in the litigation which led to the judgment in question". He argued that this statement applied to third parties, such as his wife, who are in "proximity to the debtor". In that regard, he pointed to the interests of his wife, given the risk that the home she owns will be "attacked" by the trustees. 47 Mr Mead also submitted that the QBCC does not need the money the subject of the judgment debt, particularly in the context of the overall loss arising from the pandemic. Further, Mr Mead stated that the QBCC has run many businesses into bankruptcy. 48 Finally, Mr Mead advanced that the use of the word "may" in s 52(1) of the Act means that it is not mandatory that a Court make a sequestration order. He further submitted: I submit that all these facts and circumstances contribute to the basis of undue hardship. Unfair or inequitable result and unconscionable outcomes sufficient to allow the Court in its discretion to decline to make a sequestration order pursuant to sect 52(2)(b) of the Bankruptcy Act. 49 On all of those bases, Mr Mead submitted that the Court could exercise its discretion not to make a sequestration order, or, in the alternative, the Court could find that the affidavit verifying the creditor's petition was not truthful. consideration 50 Mr Mead's claim that the creditor's petition contains an error as he does not have a dwelling house or place of business in Australia must be rejected. First, Mr Mead was ordinarily resident in Australia at the time of bankruptcy: Re Taylor; ex parte Natwest Australia Bank Limited (1992) 37 FCR 194. I do not accept Mr Mead's submission that all of the matters in s 43(1)(b) must be satisfied. It is clear that the subsections in s 43(1)(b) are expressed in the alternative. That Mr Mead was ordinarily resident in Australia at the time of bankruptcy is sufficient to satisfy the requirement in s 43(1)(b) of the Act. 51 Second, in any event, as the BCCC submitted, relying on Fuller v Alford (2017) 252 FCR 168; [2017] FCA 782 at [45] – [48], which in turn cites Mathai v Kwee (2005) ABC(NS) 268 at [112] as follows: To have a dwelling-house in Australia it is not necessary that a debtor has a legal or equitable estate in the property in question. A licence to occupy a dwelling-house may suffice (per Goff LJ in re Brauch at p 334). 52 As Mr Mead deposes to residing at a house which his wife owns, the Court may be satisfied that Mr Mead was ordinarily resident and had a dwelling house in Australia. 53 As to the affidavit verifying the petition, whilst making no concessions as to the personal knowledge of the deponent, the QBCC, relying on Daly v Watson (1994) 50 FCR 544 at 552, correctly submitted that the evidence as to the veracity of the material in a creditor's petition may be augmented by further evidence provided at the hearing. In this case, as well as Mr Mead's own evidence, as was referred to above, there was an affidavit of Ms Holland filed on 25 June 2024, solicitor for the QBCC, which exhibited a title search of a property, the registered owner of which is Mr Mead's wife. There is also an earlier affidavit of Ms Holland filed on 21 May 2024 exhibiting the documents from the Magistrate's Court proceedings giving rise to the judgment debt. They also prove Mr Mead's address. 54 Further, as to Mr Mead's suggestion that the evidence of Mr Paul was untruthful, the QBCC correctly submitted that Mr Paul was not cross-examined and therefore the submission cannot be relied upon. 55 With respect to the submissions made by Mr Mead about the circumstances surrounding the Magistrate's Court hearing giving rise to the judgment debt, none of those amount to a justification for the Court going behind the judgment debt. Mr Mead does not seek to impugn the validity of the QBCC'S claim for the debt: Ramsay [65]. Further, as submitted by the QBCC, the relevant judgment was entered on appearance by Mr Mead and has not been appealed from. 56 Mr Mead's submission, attempting to annex the principle in Ramsay in the sense that it contemplated that someone in the position of his wife is a third party whose interests should be protected, is misconceived. As is clear from [55] of the reasons of the plurality in Ramsay, the interests to which the High Court was directed were those of other creditors. 57 Mr Mead also maintained that he is not insolvent however there was no evidence before the Court in that regard, save for his assertions in his affidavit of 31 January 2024 to that effect. Also in that affidavit, Mr Mead deposed as follows: 27. Health of Respondent 28. I say that because of my ill health I am currently unable to work full time and my wife is the prime income producer in our family at the moment and she meets the bulk of the expenses of our family. 58 Further, while Mr Mead submitted at the hearing that his health was improving to the point where he may be able to work again, such a submission was not consistent with the evidence before the Court which included that his health was "tenuous" and sets out that he suffers from a number of serious medical conditions. 59 In the absence of any further evidence, I do not accept that Mr Mead is likely to be able to return to work. 60 Given the above, I am not satisfied that Mr Mead is not insolvent. 61 Lastly, Mr Mead relies on the hardship he and his wife may suffer should a sequestration order be made. He also submits that it is not in the public interest for them to become homeless, should a consequence of the sequestration order be that the home owned by his wife be "attacked" by the trustees. 62 It is accepted that the making of a sequestration order may lead to hardship for the debtors and perhaps others affected by his or her circumstances. Whilst that is unfortunate, there is no basis for it to be a reason for the Court not to make a sequestration order. In assisting the Court, counsel for the QBCC handed up a decision of the Federal Circuit Court of Baycorp Collections PDL (Aus) Pty Ltd v Hsia [2018] FCCA 249, being the only decision counsel had been able to identify which dealt with the question of hardship in the context of the making of a sequestration order. Whilst not binding on this Court, I endorse the observations of his Honour Judge Street at [6] as follows: In relation to s 52(2) as to whether there is other sufficient cause why a sequestration order should not be made, the respondent has identified the hardships that he has faced in relation to the loss of his mother, and it is clear that his circumstances are one in which he has been struggling to deal with personal issues. They are not reasons why other sufficient cause has been shown that a sequestration order should not be made. They are reasons why the respondent should continue to seek and obtain professional help as and when he needs it. 63 For these reasons, the claim of hardship does not amount to an "other sufficient cause" under s 52(2)(b) of the Act. I am not satisfied that the causes put by Mr Mead outweigh the public interest in avoiding unremunerative trading and the rights of creditors who are unable to have their debts paid: Cain at 646. 64 I am also satisfied that the QBCC has met the formal requirements with respect to the hearing before Judicial Registrar Schmidt and before me, for the following reasons: The creditor's petition was presented on 3 November 2023 and complies with the form requirements: s 47(1A) of the Act; r 4.02 of the Bankruptcy Rules. It was verified by the affidavit of Mr Paul made on 2 November 2023: s 47(1) of the Act; r 4.02(2) of the Bankruptcy Rules. The creditor's petition was presented against Mr Mead in relation to a debt exceeding $10,000 and within six months of the date of the act of bankruptcy: s 44(1)(a) and (c) of the Act; reg 10A of the 2021 (Cth). The creditor's petition was accompanied by an affidavit of Mr Couper stating the matters required by r 4.04(1)(a) of the Bankruptcy Rules. Mr Mead was personally served with the creditor's petition, affidavit of Mr Couper, affidavit of service of the bankruptcy notice and the trustee consent to act declaration on 26 November 2023, more than five days before the hearing of the creditor's petition. The service of such documents was deposed to in the affidavit of Mr Thach sworn on 30 November 2023. The bankruptcy notice BN 261648 dated 19 September 2023 was in the prescribed form and related to a final judgment debt of an amount that is at least $10,000.00: ss 41(1), (2) of the Act; regs 9, 10A of the Regulations. The bankruptcy notice was not issued after a period of more than six years since the judgment was given: s 41(3) of the Act. The judgment was attached to the bankruptcy notice: Curtis v Singtel Optus Pty Ltd (2014) 225 FCR 458; [2014] FCAFC 144 at [35]. The bankruptcy notice was served on Mr Mead on 29 September 2023, within six months of the notice being issued as required by reg 10 of the Regulations. Pursuant to s 40(1)(g) of the Act, Mr Mead committed an act of bankruptcy by failing to comply with the bankruptcy notice on or before 20 October 2023 which is the time fixed for compliance with the notice. As stated above, at the time when the act of bankruptcy was committed, Mr Mead was ordinarily resident and had a dwelling house in Australia: ss 43(1)(b)(i)-(ii) of the Act. One day prior to the hearing before Judicial Registrar Schmit on 7 February 2024, the QBCC filed an affidavit of Mr Sia affirmed on 6 February 2024 deposing that the debt was still owing, and an affidavit of search of Ms Holland affirmed on 6 February 2024: s 44(1) of the Act; r 4.06 of the Bankruptcy Rules. The QBCC filed further affidavits of debt and search one day prior to the hearing before me. 65 A creditor's petition lapses at the expiration of 12 months commencing on the date of the presentation of the petition unless before the expiration of 12 months, a sequestration order is made on the petition, or the petition is dismissed or withdrawn: s 52(4) of the Act. The creditor's petition was presented over 12 months ago. However, as stated by the Full Court of the Federal Court (Allsop CJ, Markovic and Colvin JJ) in Bechara, consistent with the reasoning of Bennett J, with which Cowdroy J agreed in Totev at [53] – [62] and [64] – [65], in circumstances where a sequestration order was made by a registrar, the application for review does not render the sequestration order "provisional or ineffective": [151]. A sequestration order has been validly made by Judicial Registrar Schmidt on 7 February 2024, before the creditor's petition had lapsed: s 52(4) of the Act. 66 Therefore, in summary, I am satisfied that Mr Mead has committed an act of bankruptcy and that at the time when the act of bankruptcy was committed, he was ordinarily resident and had a dwelling house in Australia: s 43(1) of the Act. Further, I am satisfied that the requirements of s 52(1) of the Act have been met. Specifically, I am satisfied that there is proof of the matters stated in the creditor's petition, there is proof of service of the creditor's petition and that the debt on which the QBCC relies is still owing. As the matters in s 52(1) have been satisfied, the QBCC "has a prima facie right to a sequestration order": Toyota Finance Australia Ltd v Youssef Berro [2022] FCA 497 at [33]. 67 I am not satisfied that Mr Mead can pay his debts as they fall due, nor do I consider that there is other sufficient cause such that a sequestration order should not be made: 52(2) of the Act. 68 While the QBCC provided to the Court a short form bill of costs, along with draft orders which fix the sum of its costs, I do not propose to fix the costs of the QBCC. conclusion 69 For the reasons above, I dismiss the review application and I affirm the orders made by Judicial Registrar Schmidt on 7 February 2024. The costs of the review application should be paid from the respondent's estate. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher. Associate: Dated: 25 November 2024